Global Economic
New Delhi Desk (20.11.2024): Noted economist, and former Reserve Bank of India (RBI) Governor Raghuram Rajan has advised all countries, including the United States, to take measures that, if not followed, could lead to serious risks in the future. He has expressed his concern over the rising public debt globally. Rajan has said that the ever-increasing debt can make the world extremely vulnerable in the next emergency. This is a warning to those countries who are running their economy by raising huge debts. This includes the US and China. But the threat will also be to countries like India that do business with countries like the US and China. China is India’s biggest trade partner as every activity in the US has an impact on India.
Raghuram Rajan has urged “debt-fueled” countries to look at their rising public debt. A big economist needs to say this amid the growing threat of epidemics in the world. Big economists have a long view of money and budgets and can predict the future. “We have seen the worldwide monetary emergency and the pandemic. In the coming times, such epidemics may become more frequent. So it is dangerous to ignore the rising debt levels.”
Rajan made the remarks during his speech at the annual Bancor Prize ceremony in Rome. “There is a need to reform multilateral institutions to save the world from fragmentation. He also suggested that the problems can be solved by opening up trade routes in service trade, climate action, and other new areas.
A Warning to the US
Speaking to reporters after his speech, Rajan said the US public debt is rising rapidly, making it financially insecure. According to the latest estimates of the International Monetary Fund (IMF), America’s debt is on the way to continue increasing. He cautioned that this is not just America’s problem, but also a warning to many other countries in the world.
The shocking picture of global Debt
As indicated by the IMF, worldwide public obligation is supposed to reach almost $100 trillion toward the finish of 2024, representing 93% of worldwide GDP (Gross domestic product). The US and China are significant supporters of this.
Rajan also said that the slow rate of inflation and falling interest rates are allowing countries to improve their financial health. But, despite this, most of the governments are not showing any readiness in this regard.
Need to avoid debt Risks
Rajan stressed that it is very important to reduce debt so that a safety cushion can be created for any emergency in the future. He also said that highly indebted countries become unable to help each other, which can pose another threat to the world.
How much debt does the country owe?
According to the International Monetary Fund (IMF), the US has a debt burden of 121 percent of its GDP. That is, he has not drowned up to the throat, but the water has gone up to the top of his head. Canada is in second place with a debt of 106 percent of its GDP. China’s debt is 90.1 percent of its GDP. In India, it is 83.1 percent. Sudan has the highest debt, accounting for 344.4 percent of its GDP. France, Spain, and England also have debt of more than 100 percent of GDP.
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